Consider a Reverse Mortgage - as Your Last Option
Home buyers often save rigorously for their home, forgoing expenditures and making sacrifices to pay down the mortgage and save for retirement. At retirement they get to enjoy their dream home debt-free. The only problem with this scenario for a lot of retirees is that they live on a fixed, and often not very large, income.
One option is to take a reverse mortgage - a loan against the home, which brings you money while you still live in your home. You can usually borrow between 10 to 40 percent of the value of your home depending on your age. A reverse mortgage loan requires no repayment for as long as you live in your home and you will never owe more than the value of your home.
This loan is different from a traditional mortgage in two ways. In order to qualify for a traditional mortgage, the bank checks your income to see how much you can afford to repay each month, but with a reverse mortgage there are no monthly repayments. With most loans, if you fail to make your repayments, you are in trouble. With a reverse mortgage, you don\'t have any repayments. Thus, the debt grows larger as you keep getting cash advances and the interest is added to the amount you owe. This is why a reverse mortgage is called a \"rising debt, falling equity\" loan. As the amount you owe (your debt) grows larger, your equity (the value of your home less debt) is getting smaller.
You can receive income from your reverse mortgage in two ways. You can take the loan and invest it in an annuity. In turn, this annuity will provide you with income until your death. The second alternative is to receive monthly income from your reverse mortgage provider. Here you simply increase the size of your loan on a regular basis in order to receive income.
There is one big downside to all of this - you still owe money on your home. The total amount you will owe at the end of the loan will equal the loan plus all the interest accrued. All the interest can be a substantial amount of money.
Before you apply for a reverse mortgage, discuss your options with your family. Remember that a reverse mortgage will reduce the size of your final estate.
About the author: Tony Reed is the author of \"Consider a reverse mortgage - as your last option\", please visit his website Loans, Mortgage & Credit for more information.
\r
This article is free for republishing as long as you leave the article title, author name, body and resource box intact (means NO changes) with the links made active.
Reverse Mortgages
The term mortgage is used for a long-term loan that people take, either to buy a new home or to raise money from their existi...
The Truth About Reverse Mortgages
When looking into reverse mortgage options, it can be hard to decipher between fact and myth. It is important to understand t...
Home Equity Loans vs Reverse Mortgages
While the principles of a home equity loan and a reverse mortgage are similar, there are differences in terms of eligibility ...
Reverse Mortgage Information
A reverse mortgage, also known as an equity mortgage, can be defined as a type of loan applicable to older people, through wh...
Reverse Home Mortgages
Senior citizens and retirees can use a reverse home mortgage for meeting their cash demands. They can use their home as a sou...
Home Equity Loans
Home Equity Loans?
By applying for a home equity loan, you use the market value of a home as the collateral. Home equity lo...
An Introduction To Mortgages
Mortgages have paved the way for people to realize their dreams of owning a house. Mortgages are also a viable option for peo...
Home Equity Loan without Perfect Credit - Home Equity Loans vs. Reverse Mortgages
Without perfect credit, you can use your homes equity for yourfinancial needs. No matter what your credit score, you can find...
When is a Reverse 1031 Exchange the Right Choice?
Tax-deferred exchanges are great opportunities for real estate investors. In a typical property transaction, the seller is hi...
Reverse Mortgage Loan Simplified
A Reverse Mortgage, also known as 'equity release' is a financial process that allows seniors to convert the equity in their ...
Reverse Mortgages - Get The Money You Need - Part 1 of 4
Reverse Mortgages are loans that allow you to borrow back the equity in your home. Just as you once paid the bank, the bank ...
Mortgage Refinancing: How to Avoid Mortgage Scams
If you are in the process of refinancing your home mortgage you want the new loan to be the best mortgage possible. Many hom...
The Reverse - Not a Miracle Football Play For Most Youth Football Teams
Miracle Football Plays- The Reverse is No Magic BulletMost of us think of reverse plays as ones where the flow moves to the o...
Is It Possible To Get Home Equity Loans With Your Bad Credit?
With your history of poor credit ratings, no wonder getting home equity loans with bad credit is disheartening task. If you h...
2nd Mortgage Equity Loans Behind a Payment Option Home Mortgages
Option adjustable rate mortgages (ARMs) were created in 1981 and for years were marketed to well-heeled home buyers who wante...
An Introduction To Mortgage Rates
Mortgage is a popular way of financing the purchase of a new house as well as obtaining money against an existing property. A...
Quick Mortgage Tips for Home Loans, Equity Loans, Reverse Loans, Cash-Out Loans, Refinance Loans
If you're considering a mortgage loan, you might be wondering what options are available. Today, there are many options besid...
Mortgage Calculators Can Help You Find the Right Loan
With dozens of mortgage options available to finance your home loan, how do you know which option is the best value for your ...
Traditional Mortgages are Back in Style
The housing boom of recent years has allowed many Americans to purchase homes. Many new homeowners used non-traditional mort...
Interest Only Mortgage - Good or Bad Idea?
If you play your cards right, you can make a killing with Interest Only Mortgage. Know the facts before you invest on this ty...